Ericsson, STMicroelectronics to Shut Down ST-Ericsson

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Breaking up is hard to do, even for joint ventures between major technology firms. Ericsson and STMicroelectronics have announced that they are splitting up a joint venture between the two, ST-Ericsson.

The two companies have agreed on a way forward for the assets of ST-Ericsson. Ericsson will get the designs of LTE thin modems, while STMicroelectronics will get the rest of the venture’s products. The two companies will then wind down ST-Ericsson.

“Ericsson continues to believe that the thin modems hold a strategic value to the wireless industry,” said Hans Vestberg, Ericsson President and CEO and chairman of the board of directors of ST-Ericsson. “With this move Ericsson will create a highly focused ‘thin modem only’ operation - an area in which both parents have invested significant amounts to establish industry leading technology and Intellectual Property. Initial customer contacts give support to the belief that our modems will meet the requirements of the manufacturers in the rapidly growing smartphone and tablet market."

Carlo Ferro, the COO of ST-Ericsson, will become CEO and will oversee the shutdown of ST-Ericsson, replacing Diedier Lamouche. The move will take effect on April 1. Ferro will oversee business continuity as the unprofitable venture winds down.

“I welcome Carlo Ferro as the new President and CEO of ST-Ericsson,” Vestberg said. “Carlo has over twenty years of experience in the semiconductor industry and a strong track record in driving and managing complex transformation projects. He has been a contributor to the solid progress ST-Ericsson has made the past year in terms of strategy execution and significantly lowering the breakeven point."

The thin, modem technology the venture has created encompasses a number of wireless standards, including GSM, GPRS, EDGE and LTE.

The shutdown of the venture is expected to mean the loss of 1,600 jobs, most of them being in Europe.




Edited by Ashley Caputo
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Contributing Writer

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